A Guide to Hiring Remote Employees

Introduction

Companies that traditionally offered little or no remote job choices may need to reevaluate their approach in order to attract and retain top talent. 67% of companies state that their employees are more productive while working remotely, and the evidence supports the idea that businesses may survive without setting up an office in global locations.

According to a Gartner poll of 127 industry executives, 82% of companies expect to provide remote job choices. This involves employing remote team members to gain access to high-quality talent outside of their geographic region.

The need for hiring remote employees

We did not have a sudden realization and declare, "Let's become ambassadors for remote work." Over the course of several years of study, we gradually came to the conclusion that remote workplace methods such as mobile work, telework, distributed work, and other innovative ways of working may have a profoundly good effect on companies, workers, and the environment.

Regardless of what you want to call it—remote work, mobile work, digital nomads, smart working, flexible work or anything else— employees have already left the office and will not be returning. Multiple studies in a variety of businesses and countries indicate that the average office worker spends less than half of their time at their desk.

Benefits of hiring remote employees

With novel solutions like Employer of Record, companies can leverage hiring remote employees to enjoy benefits like - 

Employee Satisfaction

Preferences of employees these days are more focused on maintaining work-life balance, pursuing passion alongside profession and choosing their work location for focus and productivity. 79% of employees prefer working remotely and a staggering 36%  of them would see remote work option as a critical employee value proposition. 

A poll of 1,500 employees from fast-growing tech companies revealed that 37% would agree for a 10% pay cut if given an option to work remotely.

Hiring and retaining Gen Y talent is most challenging (opinion from 56% employers), because they prefer remote work arrangements (ranked 8 among 10 factors for choosing an employer). 

Remote work equalizes personalities and decreases discriminating potential.

Cost savings for employers

Brick-and-mortar expenses can be decreased in businesses where legislation or demands necessitate the use of employees from local (e.g. healthcare, e-tail, etc.).

Hiring remote employees reduced IBM's real estate expenditures by $50 million in 2021.

The remote work evangelism program at McKesson saved $2 million annually. Nortel believes that they save $100,000 for each remote employee per year. Dow Chemical and Nortel reduce their non-real estate costs by almost 30 percent. Sun Microsystems annually saves $68 million on real estate expenses. 

Employee Productivity

Asynchronous communications enable communication between employees from global locations to be more productive and efficient. With remote work productivity tools in place, employees from different locations may collaborate regardless of logistics. This significantly expands collaboration choices.

Challenges in hiring and managing remote employees

Each of the following issues of hiring overseas personnel can add levels of complication, particularly if this is your first experience with remote employment.

Remote Payroll Management

While hiring and managing remote employees, attempting to manage payroll by yourself without violating local rules might pose a legal risk. As setting up a legal entity in a remote location has multitude of difficulties, it is prudent to outsource your overseas payroll management to an employer of record.

Compensation Structure

Should remote workers be compensated at the same rate as local employees? What is just in their nation? What advantages do they anticipate? What is considered competitive compensation? Even though you have a few alternatives for determining pay for remote employees, it can be difficult to strike the right balance.

Misclassification of remote employees

There are severe risks associated with misclassifying employees as independent contractors, therefore avoid doing so. Various local norms and rules might subject you to fines, penalties, and company bans, as well as legal problems with your staff.

Be careful while defining job functions. What duties will your workers perform? How do they relate to your organization? Do you already have international contractors? Consider transforming some independent contractors to employees (another potentially tricky situation).

Data & IP Security

Traditional office configurations simplify intellectual property rights, if only because offices only exist in one nation at a time. International hiring considerably exacerbates the situation.

Not usually do remote employees work at a business premises, with company equipment, or on company hours. Losing your IP rights due to ignorance of international law can result in a variety of issues, including legal disputes, a damaged reputation, and more. For additional information, consult our guide on intellectual property rights for remote teams.

Complexities in Taxation

How do you calculate income taxes if you're situated in one nation but your staff is spread throughout the globe? Do they pay taxes in the area where they reside? Where are you based?

The good news is that taxes for remote employees are not significantly more difficult than taxes for office-based workers. The bad news is that the majority of taxation teaching resources are designed for persons in conventional contexts. It is essential to understand where remote employees pay taxes so that you and they remain compliant.

PEO vs. EOR

Choices extend beyond owned-entity vs partner-dependent providers, but you should always attempt to engage with a supplier that has its own entities in all countries where you expect to hire remote talent. Additionally, you should be familiar with the terms professional employer organization (PEO) and employer of record (EOR).

What does this entail? An employer of record lawfully employs people on your behalf in other countries. You manage your staff on a daily basis, yet on the local paperwork, the EOR is officially the employer. It is imperative to deal with an EOR that does not outsource your employee experience to a third party in order to lawfully hire individuals in other countries.

A few PEOs provide EOR services, but the majority do not. PEOs serve as an external human resources department. They could be able to assist you with payroll, benefits, and other HR-related responsibilities. However, unless they specifically offer employer of record services, they may be unable to assist you with your worldwide employment ambitions.

To clarify, Skuad is an official employer of record delivering worldwide HR services in all of our covered countries. Only in countries where we have a full legal entity can we offer our services. No compromises here: You are assured the greatest experience, compliance, and security in the industry while working with Skuad.

Read our insights on the differences between an EOR and a PEO to learn more.